Amgen's First Quarter 2013 Revenues Increased 5 Percent To $4.2 Billion And
Adjusted Earnings Per Share (EPS) Increased 22 Percent To $1.96
First Quarter 2013 GAAP EPS Were $1.88
2013 Adjusted EPS Expected to be Above the Midpoint of the Range of
$7.05-$7.35; 2013 Revenue Guidance Range of $17.8-$18.2 Billion Unchanged
PR Newswire
THOUSAND OAKS, Calif., April 23, 2013
THOUSAND OAKS, Calif., April 23, 2013 /PRNewswire/ -- Amgen (NASDAQ:AMGN)
today announced financial results for the first quarter of 2013. Key results
for the quarter include:
oTotal revenues increased 5 percent to $4,238 million, with 6 percent
product sales growth driven by Enbrel^® (etanercept), XGEVA^® (denosumab)
and Prolia^® (denosumab).
oAdjusted EPS grew 22 percent to $1.96 driven by tax benefits and fewer
shares outstanding in the quarter. Adjusted net income increased 16
percent to $1,498 million.
oGAAP EPS were $1.88 compared to $1.48 and GAAP net income was $1,434
million compared to $1,184 million.
oFree cash flow was $0.9 billion compared to $0.8 billion.
"We are on track to deliver our full-year growth objectives," said Robert A.
Bradway, chairman and chief executive officer at Amgen. "In addition, our key
pipeline projects are progressing well and we are looking forward to clinical
results from ongoing trials."
Year-over-Year
$Millions, except EPS and percentages Q1 '13 Q1 '12 YOY Δ
Total Revenues $4,238 $4,048 5%
Adjusted Net Income 1,498 1,287 16%
Adjusted EPS $1.96 $1.61 22%
GAAP Net Income 1,434 1,184 21%
GAAP EPS $1.88 $1.48 27%
References in this release to "adjusted" measures, measures presented "on an
adjusted basis" or to free cash flow refer to non-GAAP financial measures.
These adjustments and other items are presented on the attached
reconciliations.
Product Sales Performance
oTotal product sales increased 6 percent driven by ENBREL, XGEVA and
Prolia.
oCombined Neulasta^® (pegfilgrastim) and NEUPOGEN^® (Filgrastim) sales
were in line with the prior year.
oGlobal Neulasta sales were in line with the prior year as price
increases were offset by modest unit declines.
oGlobal NEUPOGEN sales declined 2 percent driven by lower units.
oENBREL sales increased 11 percent mainly driven by increases in the
average net sales price and a favorable change in accounting estimates,
partially offset by a slight decline in units and a reduction in
wholesaler inventory.
oAranesp^® (darbepoetin alfa) sales decreased 10 percent year over year
and 4 percent sequentially. Outside the U.S., sales were in line with the
prior quarter. In the U.S., segment share remained relatively stable, but
overall demand declined sequentially.
oEPOGEN^® (epoetin alfa) sales decreased 2 percent year over year.
Sequentially, sales decreased 9 percent driven by a favorable change in
accounting estimates in the fourth quarter and lower average net prices.
oSensipar^®/Mimpara^® (cinacalcet) sales increased 21 percent driven by
increased unit demand and a favorable change in accounting estimates.
oCombined sales of Vectibix^® (panitumumab) and Nplate^® (romiplostim)
increased 2 percent.
oXGEVA sales increased 46 percent year over year and 4 percent on a
sequential basis, reflecting increased segment share.
oProlia sales increased 61 percent year over year reflecting increased
segment share and declined 8 percent on a sequential basis primarily due
to seasonality.
Product Sales Detail by Product and Geographic Region
$Millions, except percentages Q1 '13 Q1 '12 YOY Δ
US ROW TOTAL TOTAL TOTAL
Neulasta^®/ NEUPOGEN^® $1,069 $269 $1,338 $1,344 0%
Neulasta^® 827 212 1,039 1,039 0%
NEUPOGEN^® 242 57 299 305 (2%)
Enbrel^® 974 65 1,039 938 11%
Aranesp^® 168 300 468 518 (10%)
EPOGEN^® 435 0 435 446 (2%)
Sensipar^® / Mimpara^® 179 85 264 219 21%
Vectibix^® 27 60 87 90 (3%)
Nplate^® 55 41 96 90 7%
XGEVA^®/ Prolia^® 265 100 365 241 51%
XGEVA^® 178 45 223 153 46%
Prolia^® 87 55 142 88 61%
Other 0 59 59 15 *
Total product sales $3,172 $979 $4,151 $3,901 6%
* Change in excess of 100%
Operating Expense and Tax Rate Analysis, on an Adjusted Basis
oCost of Sales, excluding the impact of the Puerto Rico excise tax,
decreased 0.9 points.
oResearch & Development (R&D) expenses increased 18 percent in the first
quarter of 2013 primarily in support of our later-stage clinical programs,
including AMG 145.
oSelling, General & Administrative (SG&A) expenses increased 8 percent in
the first quarter of 2013 driven primarily by higher ENBREL profit share
expenses. ENBREL profit share expenses increased 17 percent to $378
million in the first quarter.
$Millions, except percentages
On an Adjusted Basis Q1 '13 Q1 '12 YOY Δ
Cost of Sales $671 $666 1%
% of sales 16.2% 17.1% (0.9) pts
% of sales (Excluding PR excise tax) 14.1% 15.0% (0.9) pts
Research & Development $851 $723 18%
% of sales 20.5% 18.5% 2.0 pts
Selling, General & Administrative $1,144 $1,057 8%
% of sales 27.6% 27.1% 0.5 pts
TOTAL Operating Expenses $2,666 $2,446 9%
pts: percentage points
oAdjusted Tax Rate for Q1 2013 reflects the federal and state tax benefits
associated with the resolution of the Company's federal audit for tax
years 2007-2009. In addition, the American Taxpayer Relief Act of 2012
was enacted in the first quarter of 2013, resulting in recognition of the
full 2012 federal R&D credit in the first quarter of 2013.
On an Adjusted Basis Q1 '13 Q1 '12 YOY Δ
Tax Rate* (0.9%) 15.6% (16.5) pts
Tax Rate (Excluding PR excise tax credits) 4.2% 20.2% (16.0) pts
pts: percentage points
* Note: Q1 represents a net tax benefit of $13M
Cash Flow and Balance Sheet Discussion
oThe Company generated $0.9 billion of free cash flow in the first quarter
of 2013 versus $0.8 billion in the first quarter of 2012. The increase was
driven primarily by higher revenues offset partially by higher cash taxes.
oDuring the quarter, the Company repurchased approximately 9 million shares
of common stock at a total cost of $0.8 billion and at an average price of
$85.03. The Company has $1.6 billionremaining under its stock repurchase
authorization.
oDuring the quarter, the Company settled in cash $2.5 billion of 0.375
percent Convertible Senior Notes upon their maturity.
oThe Company previously announced that its Board of Directors declared a
$0.47 per share dividend for the second quarter of 2013. The dividend will
be paid on June 7, 2013, to all stockholders of record as of the close of
business on May 16, 2013.
$Billions, except shares Q1 '13 Q1 '12 YOY Δ
Operating Cash Flow $1.0 $1.0 $0.1
Free Cash Flow 0.9 0.8 0.1
Dividend Paid 0.4 0.3 0.1
Cost of Shares Repurchased 0.8 1.4 (0.7)
Adjusted Avg. Diluted Shares (millions) 764 799 (35)
Cash Balance 21.3 19.4 1.9
Debt Outstanding 23.9 21.4 2.5
Stockholders' Equity 19.5 18.9 0.6
Note: Numbers may not add due to rounding
2013 Guidance
For the full year 2013, the Company expects:
oTotal revenue guidance range unchanged at $17.8 billion to $18.2 billion.
oAdjusted EPS to be above the midpoint of the range of $7.05–$7.35.
oAdjusted tax rate to be in the range of 11 percent to 12 percent. This
reflects the impact of a higher excise tax enacted by the Puerto Rico
government, to be effective July 1 of this year. The tax, which is charged
to Cost of Sales, is creditable against U.S. federal income taxes.
Excluding the Puerto Rico excise tax, Amgen expects the adjusted tax rate
for 2013 to be in the range of 15 percent to 16 percent.
oCapital expenditures guidance unchanged at approximately $700 million.
First Quarter Product and Pipeline Update
The Company provided the following information on clinical programs:
oTalimogene laherparepvec: The Company discussed that data from a Phase 3
study in melanoma will be presented at the American Society of Clinical
Oncology (ASCO) 2013 Annual Meeting in June. The Company also discussed
that primary analysis of the overall survival secondary end point is
expected in late 2013.
oTrebananib: The Company stated that progression-free survival results
from a Phase 3 study in recurrent ovarian cancer are expected mid-year.
oAMG 416: The Company stated that it recently initiated Phase 3 studies
for the treatment of secondary hyperparathyroidism.
oBiosimilars: The Company discussed plans to commence a pivotal study for
biosimilar Herceptin^® (trastuzumab) in the second quarter.
Note: Herceptin® is a product of Genentech, a member of the Roche group
Non-GAAP Financial Measures
The Adjusted non-GAAP (U.S. Generally Accepted Accounting Principles)
financial measures included above for the first quarters of 2013 and 2012
exclude, for the applicable periods, certain expenses related to acquisitions,
cost-savings initiatives, various legal proceedings, non-cash interest expense
associated with our convertible notes and certain other adjustments, as
applicable. These adjustments and other items are presented on the attached
reconciliations.
Management has presented its operating results in accordance with GAAP and on
an "adjusted" (or non-GAAP) basis and Free Cash Flow which is a non-GAAP
financial measure for the first quarters of 2013 and 2012. In addition,
management has presented its full year 2013 EPS and tax rate guidance in
accordance with GAAP and on an "adjusted" (or non-GAAP) basis. The Company
believes that the presentation of non-GAAP financial measures provides useful
supplementary information to and facilitates additional analysis by
investors. The Company uses these non-GAAP financial measures in connection
with its own budgeting and financial planning. These non-GAAP financial
measures are in addition to, not a substitute for, or superior to, measures of
financial performance prepared in conformity with GAAP.
About Amgen
Amgen discovers, develops, manufactures and delivers innovative human
therapeutics. A biotechnology pioneer since 1980, Amgen was one of the first
companies to realize the new science's promise by bringing safe, effective
medicines from lab to manufacturing plant to patient. Amgen therapeutics have
changed the practice of medicine, helping millions of people around the world
in the fight against cancer, kidney disease, rheumatoid arthritis, bone
disease and other serious illnesses. With a deep and broad pipeline of
potential new medicines, Amgen remains committed to advancing science to
dramatically improve people's lives. For more information, visit www.amgen.com
and follow us on www.twitter.com/amgen.
Forward-Looking Statements
This news release contains forward-looking statements that involve significant
risks and uncertainties, including those discussed below and others that can
be found in our Form 10-K for the year ended Dec. 31, 2012, and in any
subsequent periodic reports on Form 10-Q and Form 8-K. Amgen is providing
this information as of the date of this news release and does not undertake
any obligation to update any forward-looking statements contained in this
document as a result of new information, future events or otherwise.
No forward-looking statement can be guaranteed and actual results may differ
materially from those we project. The Company's results may be affected by
our ability to successfully market both new and existing products domestically
and internationally, clinical and regulatory developments (domestic or
foreign) involving current and future products, sales growth of recently
launched products, competition from other products (domestic or foreign), and
difficulties or delays in manufacturing our products. In addition, sales of
our products are affected by reimbursement policies imposed by third-party
payors, including governments, private insurance plans and managed care
providers and may be affected by regulatory, clinical and guideline
developments and domestic and international trends toward managed care and
healthcare cost containment as well as U.S. legislation affecting
pharmaceutical pricing and reimbursement. Government and others' regulations
and reimbursement policies may affect the development, usage and pricing of
our products. Furthermore, our research, testing, pricing, marketing and
other operations are subject to extensive regulation by domestic and foreign
government regulatory authorities. We or others could identify safety, side
effects or manufacturing problems with our products after they are on the
market. Our business may be impacted by government investigations, litigation
and product liability claims. If we fail to meet the compliance obligations
in the corporate integrity agreement between us and the U.S. government, we
could become subject to significant sanctions. Further, while we routinely
obtain patents for our products and technology, the protection offered by our
patents and patent applications may be challenged, invalidated or circumvented
by our competitors. We depend on third parties for a significant portion of
our manufacturing capacity for the supply of certain of our current and future
products and limits on supply may constrain sales of certain of our current
products and product candidate development. In addition, we compete with
other companies with respect to some of our marketed products as well as for
the discovery and development of new products. Discovery or identification of
new product candidates cannot be guaranteed and movement from concept to
product is uncertain; consequently, there can be no guarantee that any
particular product candidate will be successful and become a commercial
product. Further, some raw materials, medical devices and component parts for
our products are supplied by sole third-party suppliers. Our business
performance could affect or limit the ability of our Board of Directors to
declare a dividend or our ability to pay a dividend or repurchase our common
stock.
Amgen Inc.
Condensed Consolidated Statements of Income - GAAP
(In millions, except per share data)
(Unaudited)
Three months ended
March 31,
2013 2012
Revenues:
Product sales $ 4,151 $ 3,901
Other revenues 87 147
Total revenues 4,238 4,048
Operating expenses:
Cost of sales 744 750
Research and development 878 736
Selling, general and administrative 1,158 1,079
Other 16 6
Total operating expenses 2,796 2,571
Operating income 1,442 1,477
Interest expense, net 263 235
Interest and other income, net 164 124
Income before income taxes 1,343 1,366
Provision for income taxes (91) 182
Net income $ 1,434 $ 1,184
Earnings per share:
Basic $ 1.91 $ 1.50
Diluted $ 1.88 $ 1.48
Average shares used in calculation of earnings per share:
Basic 751 791
Diluted 764 800
Amgen Inc.
Condensed Consolidated Balance Sheets - GAAP
(In millions)
(Unaudited)
March 31, December 31,
2013 2012
Assets
Current assets:
Cash, cash equivalents and marketable $ 21,271 $
securities 24,061
Trade receivables, net 2,528 2,518
Inventories 2,737 2,744
Other current assets 2,159 1,886
Total current assets 28,695 31,209
Property, plant and equipment, net 5,296 5,326
Intangible assets, net 3,897 3,968
Goodwill 12,604 12,662
Other assets 1,148 1,133
Total assets $ 51,640 $
54,298
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 5,135 $
5,696
Current portion of long-term debt 7 2,495
Total current liabilities 5,142 8,191
Long-term debt 23,885 24,034
Other non-current liabilities 3,122 3,013
Stockholders' equity 19,491 19,060
Total liabilities and stockholders' equity $ 51,640 $
54,298
Shares outstanding 750 756
Amgen Inc.
GAAP to "Adjusted" Reconciliations
(In millions)
(Unaudited)
Three months ended
March 31,
2013 2012
GAAP cost of sales $ 744 $ 750
Adjustments to cost of sales:
Non-cash amortization of product technology rights (71) (71)
acquired in a prior year business combination
Stock option expense (a) (2) (3)
Certain charges pursuant to our continuing efforts - (10)
to improve cost efficiencies in our operations
Total adjustments to cost of sales (73) (84)
Adjusted cost of sales $ 671 $ 666
GAAP research and development expenses $ 878 $ 736
Adjustments to research and development expenses:
Acquisition-related expenses (b) (22) (7)
Stock option expense (a) (5) (6)
Total adjustments to research and development (27) (13)
expenses
Adjusted research and development expenses $ 851 $ 723
GAAP selling, general and administrative expenses $ 1,158 $ 1,079
Adjustments to selling, general and administrative
expenses:
Acquisition-related expenses (c) (10) (15)
Stock option expense (a) (4) (7)
Total adjustments to selling, general and (14) (22)
administrative expenses
Adjusted selling, general and administrative $ 1,144 $ 1,057
expenses
GAAP operating expenses $ 2,796 $ 2,571
Adjustments to operating expenses:
Adjustments to cost of sales (73) (84)
Adjustments to research and development expenses (27) (13)
Adjustments to selling, general and administrative (14) (22)
expenses
Expense resulting from changes in the estimated
fair values of the contingent (1) (2)
considerationobligations related to a prior year
business combination
Certain charges pursuant to our continuing efforts - (1)
to improve cost efficiencies in our operations
Expense related to various legal proceedings (15) (3)
Total adjustments to operating expenses (130) (125)
Adjusted operating expenses $ 2,666 $ 2,446
GAAP income before income taxes $ 1,343 $ 1,366
Adjustments to income before income taxes:
Adjustments to operating expenses 130 125
Non-cash interest expense associated with our 12 34
convertible notes
Total adjustments to income before income taxes 142 159
Adjusted income before income taxes $ 1,485 $ 1,525
GAAP provision for income taxes $ $ 182
(91)
Adjustments to provision for income taxes:
Income tax effect of the above adjustments (d) 40 56
Income tax benefit from resolving certain
non-routine transfer-pricing and 38 -
acquisition-related issues with tax authorities
Total adjustments to provision for income taxes 78 56
Adjusted provision for income taxes $ $ 238
(13)
GAAP net income $ 1,434 $ 1,184
Adjustments to net income:
Adjustments to income before income taxes, net of 102 103
the tax effect of the above adjustments
Income tax benefit from resolving certain
non-routine transfer-pricing and (38) -
acquisition-related issueswith tax authorities
Total adjustments to net income 64 103
Adjusted net income $ 1,498 $ 1,287
Amgen Inc.
GAAP to "Adjusted" Reconciliations
(In millions, except per share data)
(Unaudited)
The following table presents the computations for GAAP and "Adjusted"
diluted EPS, computed under the treasury stock method
"Adjusted" EPS presented below excludes stock option expense:
Three months ended Three months ended
March 31, 2013 March 31, 2012
GAAP "Adjusted" GAAP "Adjusted"
Income (Numerator):
Net income for basic $ $ 1,498 $ $ 1,287
and diluted EPS 1,434 1,184
Shares
(Denominator):
Weighted-average 751 751 791 791
shares for basic EPS
Effect of dilutive 13 13 (*) 9 8 (*)
securities
Weighted-average
shares for diluted 764 764 800 799
EPS
Diluted EPS $ $ 1.96 $ $ 1.61
1.88 1.48
(*) Dilutive securities used to compute "Adjusted" diluted EPS for the
three months ended March 31, 2013 and 2012 were computed under the
treasury stock methodassuming that we do not expense stock options.
For the three months ended March 31, 2013 and 2012, the total pre-tax
(a) expense for employee stock options was $11 million and $16 million,
respectively
"Adjusted" diluted EPS including the impact of stock option expense for
the three months ended March 31, 2013 and 2012 was as follows:
Three months ended
March 31,
2013 2012
"Adjusted" diluted $
EPS, excluding stock 1.96 $ 1.61
option expense
Impact of stock
option expense (net (0.01) (0.02)
of tax)
"Adjusted" diluted $
EPS, including stock 1.95 $ 1.59
option expense
The adjustments in 2013 related primarily to non-cash amortization of
intangible assets acquired in prior year business combinations. The
(b) adjustments in 2012 included non-cash amortization of intangible assets
acquired in a prior year business combination and other
acquisition-related expenses
The adjustments in 2013 related to non-cash amortization of intangible
assets acquired in prior year business combinations. The adjustments in
(c) 2012 related primarily to transaction costs as well as non-cash
amortization of intangible assets acquired in prior year business
combinations
The tax effect of the adjustments between our GAAP and "Adjusted"
(d) results takes into account the tax treatment and related tax rate(s)
that apply to each adjustment in the applicable tax jurisdiction(s).
Generally, this results in a tax impact at the U.S. marginal tax rate
for certain adjustments, including the majority of amortization of
intangible assets and non-cash interest expense associated with our
convertible notes, whereas the tax impact of other adjustments,
including stock option expense, depends on whether the amounts are
deductible in the tax jurisdictions where the expenses are incurred or
the asset is located and the applicable tax rate(s) in those
jurisdictions. Due to these factors, the effective tax rates for the
adjustments to our GAAP income before income taxes, for the three months
ended March 31, 2013 and 2012, were 28.2% and 35.2%, respectively
For the three months ended March 31, 2012, expenses related to
Note: amortization of certain acquired intangible assets within operating
expenses have been reclassified to conform to the current year
presentation
Amgen Inc.
Reconciliation of Free Cash Flow
(In millions)
(Unaudited)
Three months ended
March 31,
2013 2012
Cash Flows from Operations $ 1,049 $
972
Capital Expenditures (158) (144)
Free Cash Flow $ 891 $
828
Reconciliation of GAAP EPS Guidance to "Adjusted"
EPS Guidance for the Year Ending December 31, 2013
(Unaudited)
The Company updated its "Adjusted" EPS guidance to be above the midpoint of
the range of $7.05 to $7.35
2013
GAAP diluted EPS guidance $ 6.68 - $
6.98
Known adjustments to arrive at
"Adjusted" earnings*:
Acquisition-related (a) 0.36
expenses
Stock option expense 0.03
Expense related to a legal 0.02
proceeding
Non-cash interest expense
associated with our 0.01
convertible notes
Tax settlement (b) (0.05)
"Adjusted" diluted EPS guidance $ 7.05 - $
7.35
* The known adjustments are presented net of their related aggregate tax
impact of approximately $0.20 per share.
To exclude acquisition-related expenses related primarily to non-cash
(a) amortization of intangible assets acquired in prior year business
combinations
(b) To exclude income tax benefit from resolving certain non-routine
transfer-pricing and acquisition-related issues with tax authorities
Reconciliation of GAAP Tax Rate Guidance to "Adjusted"
Tax Rate Guidance for the Year Ending December 31, 2013
(Unaudited)
2013 with PR excise tax 2013 without PR
credit excise tax credit
GAAP tax rate guidance 9% - 10% 13% - 14%
Tax rate effect of known 2% 2%
adjustments discussed above
"Adjusted" tax rate guidance 11% - 12% 15% - 16%
CONTACT: Amgen, Thousand Oaks
Ashleigh Koss, 805-313-6151 (media)
Arvind Sood, 805-447-1060 (investors)
(Logo: http://photos.prnewswire.com/prnh/20081015/AMGENLOGO)
SOURCE Amgen
Website: http://www.amgen.com